California Lawmakers Close Budget Gap
Published: June 15, 2011
LOS ANGELES — The Democratic-controlled Legislature passed a stopgap state budget on Wednesday to close California’s $10 billion deficit.
But the plan relied on the same sort of accounting maneuvers that Gov. Jerry Brown has decried since he campaigned for office last year, and it remained uncertain whether he would sign it.
Democratic leaders made it clear that their budget was not ideal and that they favored a plan Mr. Brown had put forward, which they said would address fundamental shortfalls in the state budget, in large part by extending three expiring taxes. But such extensions require a two-thirds’ approval in the Legislature, and Democrats were unable to rally enough Republican support.
But a new state law requires only a simple majority to pass the budget, so Democratic leaders said they felt obligated to do so to meet Wednesday’s budget deadline.
That new law, which voters approved last year in a ballot initiative, also permanently docks legislators’ pay for every day the budget is late.
To approve Mr. Brown’s plan, Democrats need the support of two Republicans in each house. While Republicans have said they could agree on a plan that would put the governor’s tax extensions on the fall ballot, they oppose a plan that would extend those taxes for several months before such a vote took place.
Darrell Steinberg, a Democrat who is the Senate president pro tem, said: “This budget is not our preference. We have told the Republicans, We prefer to work with you, but with you or without you, we will continue to govern California.”
Mr. Steinberg added, “I would love nothing more than coming back to the floor and fighting to pass Plan A, but if the Republican votes are not forthcoming, this is a solid and credible Plan B.”
The agreement reached by Democratic leaders in the Legislature relies on optimistic revenue forecasts, deferral of payments to schools and some parts that could be challenged in court, like a sell-leaseback on several buildings.
It also deepens some cuts, including taking another $300 million out of the state’s higher-education budget and $150 million from the state court system. In addition, it raises car-registration fees and subjects online retailers to the state sales tax, even if they are not based in California.
Mr. Brown has 12 days to sign or veto the plan. He has said he will continue to try to secure the four Republican votes he needs to pass his own plan.
Senator Robert Huff, the ranking Republican on the budget committee, said he thought Democrats were “taking a club to the head” of Republicans by trying to get them to negotiate again.
“There are some things in there that are really odious to Republicans,” Mr. Huff said of the Democrats’ budget. “They are trying to scare people with cuts to education and law enforcement. Calling it a place holder is the best way I could put it.”
Mr. Huff also said the budget could make it harder for Democrats to push for tax extensions.
“Ironically, what is happening is what we’ve been saying could happen for months: they could balance a budget without raising taxes or making an all-cuts budget,” Mr. Huff said.
Even if voters are given a chance to vote on the new taxes, their approval is hardly a given. Poll numbers have shown support from voters declining over the last several weeks as state revenue collections have improved, and a similar plan pushed in 2009 by Gov. Arnold Schwarzenegger, a Republican, failed.
If the courts blocked parts of the budget, the Legislature would have to step in again to make up the difference.
“This is the classic California get-out-of-town budget,” said Joe Mathews, a co-author of “California Crackup: How Reform Broke the Golden State and How We Can Fix It” (University of California Press, 2010). “It has all kinds of things that are phantoms, money that doesn’t exist or might not exist. But the problem here is that the only thing you can really get agreement on are fictions.”
Several lawmakers and observers said that while the budget relied on many “one-time” fixes that would do little to address future deficits, it was no worse than budgets that were approved in the last two decades.
“Even though the bond markets don’t like us, they will like us much less if we can’t have a balanced budget on time,” Mr. Mathews said. “In their defense, I don’t see a lot of ways you can make it a lot better right now.”
California lawmakers have passed a budget on time only once in the last two decades, in 2009, and within months of that, a $7 billion gap emerged.